Statoil, Norway’s largely state-owned oil and gas company, has an advertising campaign that declares: “Europe, powered by Norwegian gas”. The main findings of a report on Norway’s relationship with the European Union, published last week (17 January), suggest that “Norway, powered by European legislation” would be an apt rejoinder.

Two years ago, Jonas Gahr Støre, Norway’s foreign minister, commissioned an 11-strong committee to review the country’s dealings with the EU over the past 20 years. The result, “Outside and inside: Norway’s agreements with the European Union”, is a weighty 911-page tome. It claims that, despite not being an actual member of the EU, Norway is the equivalent of a “three-quarter” member, and has undergone as extensive a “Europeanisation” as any EU member state.

The European Economic Area (EEA) agreement defines Norway’s dealings with the EU. The deal was conceived in 1988 by Jacques Delors when he was president of the European Commission, as a way of giving the members of the European Free Trade Association access to the European single market. The EEA pact between six of the countries then in EFTA (Austria, Finland, Iceland, Liechtenstein, Norway and Sweden) and the then 12 EU countries came into effect in 1992. The remaining EFTA country, Switzerland, rejected the deal and has since been dealing with the EU through bilateral agreements.

The EEA agreement obliges Norway to adopt all EU law governing the internal market. It was set up to be both ‘dynamic and homogeneous’: to automatically integrate single market laws. Norway can, in theory, refuse to adopt EU legislation, but this has never happened – it could trigger the end of the deal. When the EEA agreement was signed, it contained 1,849 legal acts; by the beginning of 2011, there were 4,502 active legal acts – including 1,369 directives and 1,349 regulations.

The authors of “Outside and inside” calculate that EU legislation accounts for one third of Norway’s laws – roughly the same as for a fully-fledged member of the EU. But this is legislation that Norway had no say in forming, shaping or deciding, and only a handful of laws have been debated in the country’s parliament. In the 1990s, perhaps all that was needed for legislation to be implemented was a fax received in Oslo. These days, as Fredrik Sejersted – one of the report’s authors – points out, all the Norwegian government has to do is press the download button.

Norway has also asked and been allowed to join EU projects outside the EEA agreement, such as Schengen, justice and home affairs co-operation, and foreign and security policy. Through the EEA and bilateral agreements, it participates in 19 framework programmes and 26 agencies (see box). According to the report, the two sides have signed 74 bilateral agreements since 1992 over and above the EEA agreement.

It is always Norway that asks to participate in EU agencies and programmes. It has greater scope for influencing decisions within Schengen because it attends Council working groups (up to Coreper II level), but it is still excluded from actual decision-making. There are only four policy areas in which Norway takes no part: agriculture, fisheries, customs union and monetary union. (Some Norwegians would argue there is a fifth: democracy.)

Important trading partner

As “Outside and inside” points out, the EEA agreement and the bilateral deals combined have – along with its energy industry – been the driving force in boosting Norway’s finances, for example by making it easier for Norwegian companies to do business across Europe: 75% of Norway’s trade is with EU countries.

Fact File

Working together

A glance at some of Norway’s agreements with the EU:

EEA agreement (1992)

Schengen agreement

Dublin I and II (2001, 2003)

Eurojust (2005)

European arrest warrant (2006)

Cepol (2006)

Lugano convention (2007)

Treaty of Prüm (2009)

Other areas in which Norway participates:

Galileo (2001)

Civilian and military crisis management (2004)

EU military response forces/Nordic Battle Group (2005)

European Defence Agency (2006)

Norway’s economic contribution to the EU

From time to time, Norway has been accused of hitching a ‘free ride’ with the EU: reaping the benefits of the single market without joining the club. While its financial contribution to the EU during the first five years of the EEA agreement was low (around Nkr200 million annually, or €25m), Norway is today among the net contributors (though not to the EU budget); its net annual contribution is around €350m, or €72 per person. This is lower than most of the other net contributors to the EU budget, including the Netherlands and Sweden, but Norway is not involved in all policy areas.

Most of the money – at least for the first three five-year periods – was funnelled through EEA and Norway grants to projects in the EU’s newest member states, as well as Greece, Portugal and Spain. It should be noted that the EEA agreement does not formally stipulate a fee for access to the single market, but a Norwegian refusal to pay (which is unlikely) would probably lead to the EU cancelling the deal. Poland is the biggest beneficiary of Norwegian funding, receiving around €1 billion in 2009-14.

Norway also contributes to the EU through its participation in agencies and programmes, but these sums are small compared to EEA/Norway grants.

In its period of EU involvement, Norway has seen its unemployment rate drop and the creation of a substantial number of new jobs. Moreover, the report suggests that Norway’s judiciary has improved as a direct result of the agreements with the EU, leading in turn to improvements in citizens’ rights. In short, Norway’s relationship with the EU has been hugely beneficial for its society and citizens.

In opinion polls carried out for the report, 65% of Norwegians said they were highly supportive of EU-led initiatives, be they on consumer rights or the free movement of workers – often to a greater degree than in EU member states. By contrast, an opinion poll released on Monday (23 January) showed a mere 15.3% in favour of Norway joining the EU. Politicians and officials, too, are generally happy with the current relationship. They also regard the trade-off – access to the internal market without decision-making powers – as a good bargain for business and citizens.

Structural problems

But despite the economic benefits the deal poses, one problem will not go away. Judicially, the 1992 EEA agreement rests on a solid democratic foundation, according to the country’s constitution, but the “Outside and inside” report warns of growing structural problems. Since the EEA agreement came into force, the EU has implemented four new treaties and has expanded to 27 countries. Each expansion brings new laws and new obligations for Norway too. The report stresses that Norway is the equivalent of 75% a member of the Union, only slightly less than the UK or Denmark, two member states that declined to join the monetary union and have been granted opt-outs in several policy areas.

For the time being, the view – both in Norway and the EU – is that the current relationship should continue in its present form. But the report depicts the situation as fragile and far from perfect, and with frictions likely to arise on both sides.

The report tentatively suggests that bringing all the agreements within a single framework could help defuse these problems, as such a move could make more transparent (for its citizens) the extent of Norway’s EU involvement. As for the democratic deficit question, the report raises the possibility of strengthening Norwegian parliamentary oversight over EU matters.

There have been many attempts to define Norway’s relationship with the EU – and few have been flattering: ‘fax-democracy’, Brussels’s ‘richest lobbyist’, and ‘naive’ are some examples. Such descriptions are, moreover, far from inaccurate. Unless events alter the status quo (such as Iceland joining the EU), for the foreseeable future Norway’s gas will continue to power Europe, but the EU will continue to drive Norwegian legislation.